Message to sellers: Don’t wait until spring to list

Forecast calls for a hot winter market

When it comes to home sales, fall is the new spring -- at least in 2015. Area Realtors say they expect little to no let-up in market activity through the holiday season and into next year if interest rates remain low as expected.
In fact, this is likely to be among the strongest fall/winter selling seasons in memory, they say – if only they can list enough homes.
“We need more sellers,” said Coldwell Banker’s Joan Read, a member of the Greater Milwaukee Association of Realtors (GMAR) board of directors. “The old thinking that you wait until spring to list or you take a house off the market for the holidays doesn’t make sense in the current environment.”
“There’s a backlog of buyers out there, and it’s mostly the really serious buyers who are out at this time of year. You don’t want to miss them because you’re holding off until spring,” she said. “Who knows where the market will be six months from now?”

Arthur Mays, owner of Realty Among Friends and a GMAR board member, agreed. “I love selling in the winter months because the buyers who are coming out now are a lot more motivated. If you’re thinking about selling, now is the time because you’ve got buyers who are serious.”

First Weber’s Amy Curler, also a GMAR board member, noted that September sales were the highest in 10 years, rising 13.1% over the year before. The trend has continued in October. “The market has been fantastic this whole year and it’s not slowing down as it usually would,” she said.
“For sellers, I think there’s some risk in waiting until spring to list. Buyers may fall off as interest rates tick up,” she added, noting that interest rate changes affect home affordability more than home prices since most of a buyer’s monthly payment goes toward interest.

North Shore Bank’s Stephanie Glowinski-Moeller, a mortgage loan originator, said Federal Reserve watchers are predicting that rates -- currently running below 4% on a typical 30-year, fixed rate loan -- will rise to around 5% by the end of 2016.

That is still relatively low by modern historic standards. Still, the prospect of paying more later for the same house has a steady stream of prospective buyers visiting mortgage lenders’ web sites at North Shore Bank and elsewhere to obtain pre-approval letters they can use to show sellers and agents they are qualified buyers.

“This time of year, you assume it’s going to slow down, but I’m seeing a lot of people visiting my website to get a pre-approval letter, which they can obtain immediately if they qualify,” Glowinski-Moeller said.
“A lot of Realtors want to see a pre-approval letter before they even show people a home in this market,” she added. “With well-priced homes often attracting multiple bids, they don’t want to find out after the fact that a bidder can’t qualify for a mortgage on the home.”
New federal regulations that went into effect October 3 impose additional
restrictions on mortgage lenders that are slowing the closing process, she noted. “This involves additional consumer protections that I think are very good. But now instead of 30-day closings, we’re at 45-day closings.” (For more on the new regulations, collectively known as the TRID rule, see accompanying story.)

An earlier wave of regulations aimed at protecting consumers from borrowing more than they can afford to repay went into effect in early 2014. North Shore Bank Senior Vice President Michael Kellman said he and other bankers initially feared the new rules would force them to turn down some credit-worthy borrowers. But almost two years later, “I am pleasantly surprised at how frequently we are able to put together deals that I thought might not happen.”

“There are more hoops that have to be jumped through but we’re finding ways to manage those hoops so that, in the end, the answer is yes,” he said.
While the regulatory burden on mortgage lenders may have grown, both Realtors and mortgage lenders say it’s still a great time to be in the residential real estate business. Glowinski-Moeller said, “I think it’s going to be an awesome fall and winter.”

New federal regulation that went into effect on October 3 has slowed the mortgage loan closing process. But the change, commonly known as the TRID rule, has added valuable new protections for homebuyers, said Stephanie Glowinski-Moeller, a mortgage loan originator at North Shore Bank.

In the past, buyers often received a thick stack of paperwork to review and sign very shortly before, or even at, the closing. Confusing language and lack of time kept many from reading the documents, sometimes resulting in unpleasant surprises down the road. Following the collapse of the housing bubble and the foreclosure crisis, new disclosure forms were mandated to help ensure that buyers understood what they were getting into. But the paperwork remained cumbersome and confusing.

As of October 3, disclosure forms have been streamlined and combined into new “Loan Estimate” and “Closing Disclosure” forms. The Loan Estimate lays out the costs and any possible changes in the mortgage. The Closing Disclosure shows all costs related to the closing and the exact amount of money the borrower will be required to bring to closing.

To make sure buyers have time to digest this information, lenders are now required to get the Loan Estimate to the buyer no later than three business days after the loan application is submitted. Buyers must have at least seven business days to review the paperwork between receiving the Loan Estimate and the closing. The buyer must receive the Closing Disclosure at least three days before the closing.

The new regulations, along with additional regulations placed on mortgage lenders last year, have stretched the closing process timeline from 30 to 45 days in many cases. The Mortgage Bankers Association says buyers can help speed the process by taking the following steps:

·Be responsive to your lender. He or she will ask you for additional information and the process will go much smoother if you deliver the documentation completely and quickly.

·Tell your lender to move forward as soon as you finish shopping and are comfortable with your choice of loan. (Buyers are allowed ten business days to decide on a loan but do not need to wait that long.)

·Read the Loan Estimate and any revisions to the Loan Estimate carefully so any questions can be resolved early in the process.

·Avoid last minute changes to the loan to avoid delay and prevent an additional waiting period of three business days.

·Work with your real estate agent and the seller’s agent to conduct home inspections, order reports, and clear any contingencies as early in the process as possible.

·Schedule your final walk-through well before the Closing Disclosure is issued, if possible.

·Tell your lender as soon as possible about any change to the transaction that you think might impact the loan or the closing.

“There are some added steps that we’re all having to adjust to,” said Glowinski-Moeller. “But it protects the consumer, so it’s a positive development.”